Tata Steel Mining Ltd. Vs. Mr. Supriyo Kumar Chaudhuri, RP of Rohit Ferro Tech Ltd. – NCLT Kolkata Bench
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There are two going concern sales defined under Regulation 32 of IBBI (Liquidation Process) Regulations, 2016. The first one pertains to Sale of “Corporate Debtor as a going concern” under Regulation 32(e) and sale of “Business of Corporate Debtor as a going concern” under Regulation 32(f).
NCLAT holds that the Adjudicating Authority is of the considered opinion that the Committee of Creditors is entitled and also empowered to change the Resolution Professional in CIRP and that too, with a Majority of 66 % votes. In reality, the Suspended Board of Director under the Code, 2016 is not enjoined with the power to displace the existing Resolution Professional and to seek for a replacement of another Resolution Professional, being appointed in his place. Added further, an Adjudicating Authority is to adhere to the procedural formalities which are mentioned in the relevant Sections of the Code, depending on the controversies involved, in the subject matter.
In spite of several opportunities given to Suspended Directors, they refused to surrender even though their prayer for cancellation of the Non-Bailable Warrants was rejected. NCLAT holds that the provision of Rule 77 of the NCLAT Rules, 2016 read with Order XVI Rule 10 of Civil Procedure Code fully empowers the Adjudicating Authority to issue a Non-Bailable Warrant for enforcing attendance of a person. The power exercised by the Adjudicating Authority in issuing a Non-Bailable Warrant to the Appellants is thus well within jurisdiction of the Adjudicating Authority and the submission of the Counsel for the Appellants that Adjudicating Authority is not clothe with any power to issue Non-Bailable Warrant has to be rejected. NCLAT further observes that in addition to enforcement of Non-Bailable Warrants, it shall be also open for the Adjudicating Authority to recommend for initiation of prosecution against the Suspended Directors of the Corporate Debtor in event of commission of an offence within meaning of Code.
Hon’ble Supreme Court holds that once the order is passed, the statutory obligation cast upon the CMM/DM stands discharged to that extent. The next follow-up step is of taking possession of the secured assets and documents relating thereto. The same is ministerial step. It could be taken by the CMM/DM himself/herself or through any officer subordinate to him/her, including the Advocate Commissioner who is considered as an officer of his/her court. It is well established that an advocate is a guardian of constitutional morality and justice equally with the Judge. Sub-Section (1A) of Section 14 of the 2002 Act is no impediment for the CMM/DM to engage services of an advocate (an officer of the court)- only for taking possession of secured assets and documents relating thereto and to forward the same to the secured creditor in furtherance of the orders passed by the CMM/DM under Section 14(1) of the 2002 Act in that regard. If an advocate is appointed as commissioner for execution of the orders passed by the CMM/DM under Section 14(1) of the 2002 Act, that responsibility and duty will be discharged honestly and in accordance with rules of law. In our view, in law, an advocate is an officer of the court and, thus, subordinate to the CMM/DM.
NCLAT holds that a Tribunal has the power to look behind the judgement on which the Creditor cements his proof with a view to decide whether the Debt is really and truly due. A Liquidator has these powers, while functioning in a quasi, judicial status. As a matter of fact, the Tribunal and the Liquidator may not look behind every decision/judgement as a matter of routine. A Tribunal can interfere where the Liquidator has not exercised his discretion in a bona fide manner or he was proposing to do an act which no reasonable or prudent person will do. A Liquidator as an Officer of the Tribunal is to act justly and fairly while dealing with an individual who has an adverse claim to his own and does not stand on his right either in equity or in Law, as opined by this Tribunal.
Adjudicating Authority holds that Application(s) for CIRP can be initiated against any Personal Guarantor(s) to a Corporate Debtor irrespective of CIRP against the corporate Debtor, which issue is no longer res integra. Insolvency resolution process(es) can be initiated against the Personal Guarantor(s) of a NBFC / FSP irrespective of CIRP against the NBFC, provided that the concerned NBFC falls within the category of those FSPs having assets size of Rs. 500 cores or more, thus being included in the definition of Corporate Debtor under IBC and being construed as Financial Service Provider wherever the term Corporate Debtor occurs in the Code.
NCLAT holds that as the CIRP proceedings against the Principal Borrowers was withdrawn under Section 12A of the Code, the Respondent/Lender is precluded from instituting any fresh suit in respect of the same subject matter and doing so would be in contravention of Order 23 Rule 1(4) of the Civil Procedure Code. It is a well settled preposition in Law that the creditor is not bound to exhaust his/its remedy against the Principal Borrower before invoking the Guarantor or suing the Guarantor for payment of outstanding sum(s), (unless otherwise agreed to in the Guarantee Deed). A suit can be maintained against the Guarantor for payment of outstanding sums in connection with the Loan extended to the Borrower even if the Borrower itself has not been sued by the Lender. This Tribunal is of the considered opinion that the Lender has an independent access to the Guarantor issued by the Principal Borrowers. Therefore, this Tribunal holds that withdrawal of Section 7 Petition filed under the IBC Code, 2016 against the Principal Borrower is not a fetter in initiating CIRP against the Guarantor in accordance with Law